Clarke v. Berkley Assurance Co., 19-cv-0577 (DLF)

CourtUnited States District Courts. United States District Court (Columbia)
PartiesWESLEY L. CLARKE, Plaintiff, v. BERKLEY ASSURANCE COMPANY, Defendant/Counter-Plaintiff. BERKLEY ASSURANCE COMPANY, Third-Party Plaintiff, v. THE ESTATE OF JAMES MCBEE, Third-Party Defendant.
Docket NumberNo. 19-cv-0577 (DLF),19-cv-0577 (DLF)
Decision Date23 July 2020

WESLEY L. CLARKE, Plaintiff,
BERKLEY ASSURANCE COMPANY, Defendant/Counter-Plaintiff.

THE ESTATE OF JAMES MCBEE, Third-Party Defendant.

No. 19-cv-0577 (DLF)


July 23, 2020


Wesley Clarke brings this lawsuit against Berkley Assurance Company (Berkley), alleging that Berkley breached an insurance policy that Clarke had purchased from it. Compl., Dkt. 1-1. Berkley counterclaims against Clarke and impleaded Clarke's creditor, the Estate of James McBee (the Estate), seeking a declaratory judgment that Berkley was not liable under Clarke's policy. Def.'s Countercl., Dkt. 4. The Estate in turn counterclaims against Berkley for indemnification of a judgment entered by the Superior Court of the District of Columbia against Clarke. Third-Party Countercl., Dkt. 6. Before the Court are Berkley's Motion for Summary Judgment, Dkt. 13, as well as Berkley's and the Estate's Motions for Sanctions against Clarke for failing to attend his deposition, Dkt. 14; Third-Party Def.'s Mot. for Sanctions, Dkt. 16. For

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the following reasons, the Court will grant summary judgment to Berkley and grant in part and deny in part the motions for sanctions.


A. Factual Background1

Wesley Clarke, a lawyer in Washington, D.C., purchased several liability insurance policies from Berkley Assurance Company. Compl. ¶ 2. The policy relevant to this lawsuit required that Berkley "pay those sums that the insured becomes legally obligated to pay as 'damages' because of a negligent act, error or omission in the rendering of or failure to render 'professional legal services' for others for a fee." Insurance Policy at 7, Dkt. 13-3. The policy also imposed on Berkley "a duty to defend the insured against any 'suit' seeking 'damages' to which this insurance applies." Id. The policy defined "damages" as:

the monetary portion of a judgment, award, or settlement; provided that, however, 'damages' shall not include:
1. Punitive or exemplary damages . . .
2. Taxes, criminal or civil fines, or attorneys' fees of a party other than an insured or other penalties imposed by law;
3. Sanctions; . . . or
5. The return, withdrawal, reduction, restitution or payment of any fees, profits or charges for services or consideration and/or any expenses paid to the insured for services or goods.

Id. at 12-13.

On October 8, 2013, James McBee died, leaving his sole asset (a condominium at 823 3rd St. SW, No. 310, Washington, D.C.) to his brother and heir, Thomas McBee. Berkley's

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Statement of Undisputed Facts ¶¶ 15-16. Soon after, McBee hired Clarke to work as his counsel and as personal representative to the Estate. Id. ¶¶ 16-18, 50. In the following months, Clarke repeatedly acted against Thomas McBee's wishes—although purportedly in the interests of the Estate—for instance, by refusing to resign when asked and by selling the condominium when McBee wanted to retain title. Id. ¶¶ 23-25, 34, 51. Clarke also made multiple false statements to McBee—for example, that the property was "in the jaws of the Foreclosure Process" when no such proceedings existed. Id. ¶¶ 24, 33.

On April 14, 2014, Thomas McBee petitioned the Superior Court of the District of Columbia, Probate Division, to stop the sale of the Estate's property and to remove Clarke as personal representative to the Estate. Id. ¶¶ 32, 34. Instead of delaying the sale until the court had ruled, however, Clarke surreptitiously arranged to have a replacement title company rush the title settlement, thus mooting the Superior Court's decision. Id. ¶¶ 35-38, 54. On June 19, 2014, Clarke filed his final accounting summarizing all the transactions that he had undertaken as personal representative to the Estate; McBee objected to this accounting on August 7, 2014. Id. ¶¶ 2, 41-42. As a result, on January 9, 2015, Superior Court Judge Gerald Fisher appointed a special "auditor-master" to investigate McBee's allegations against Clarke. Id. ¶¶ 43-45.

The auditor-master completed his report on September 12, 2017. Id. ¶ 46. On October 24, 2017, Clarke emailed Berkley about the proceedings, seeking representation for his defense before the Superior Court, where Judge Fisher would consider whether to adopt the auditor-master's findings. Compl. ¶¶ 3, 8. Berkley declined coverage on November 21, 2017. Id. ¶ 4. Thereafter, Clarke continued his defense pro se. See Probate Ct. Hr'g Tr. at 1, Dkt. 13-5.

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On December 6, 2017, Judge Fisher held a hearing at which Clarke and the Estate each had the opportunity to contest conclusions in the auditor-master's report and to present arguments and evidence. Probate Ct. Hr'g Tr. at 2, 4-5. Clarke submitted seventy-two pages of objections to the report. Id. at 4-5. The Estate, in contrast, raised no objections to the auditor-master's report; instead, the Estate "filed a response . . . to the report agreeing with [the auditor-master's] findings and recommendations," submitted a "reply to the objections filed by Clarke," and limited its oral arguments "primarily . . . to [the court's] inquiries regarding the availability of punitive damages" because the auditor-master had recommended punitive damages but never specified an amount. Id. at 3, 5, 37.

On February 2, 2018, Judge Fisher approved the auditor-master's report in part and issued a judgment in favor of the Estate. See Statement of Undisputed Facts ¶¶ 48-63. Among other things, Judge Fisher found that Clarke violated Rules 1.3, 1.4, and 1.16 of the District of Columbia Rules of Professional Conduct, and he referred other possible violations to the D.C. Bar. Id. ¶¶ 55-59.2 Judge Fisher also ordered that Clarke disgorge the $79,065.00 of legal fees that he had collected from the Estate, reimburse $37,127.22 of disallowed estate expenses, and pay $69,393.90 of McBee's attorney's fees. Order Approving Rep. at 1-2, Dkt. 13-4. The court did not adopt the auditor-master's recommendation to impose punitive damages. Id. at 2.

B. Procedural History

On February 5, 2019, Clarke filed his initial complaint against Berkley in Superior Court, alleging breach of contract and bad faith. Compl. ¶¶ 6-15. On March 3, 2019, Berkley removed the case to the United States District Court for the District of Columbia, see Notice of Removal

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¶¶ 5-7, Dkt. 1, and on March 8, 2019, Berkley counterclaimed against Clarke for declaratory judgment and impleaded the Estate, see Def.'s Countercl. The Estate responded on March 26, 2019, counterclaiming that Berkley was obligated to indemnify the Estate for the Superior Court's judgment against Clarke. Third-Party Def.'s Countercl.

The parties began discovery and agreed on September 16, 2019 to schedule Clarke's deposition for October 2, 2019. Notice of Dep., Dkt. 15-1. Clarke failed to appear for his deposition on that morning; the evening before, at 5:44 p.m., he emailed counsel for Berkley and the Estate claiming that he was "stuck in nyc" as he was "closing [his] practice and . . . tied up until the first week of November." Email Exchange at 2, Dkt. 15-3. Both Berkley and the Estate subsequently moved for sanctions on the basis of Clarke's failure to attend the deposition. See Def.'s Mot. for Sanctions; Third-Party Def.'s Mot. for Sanctions.

On October 7, 2019, Berkley moved for summary judgment, seeking a declaration that it had no liability under the terms of Clarke's policy. Def.'s Mot. for Summ. J. On November 21, 2019, the Court directed Clarke to respond to the motion and warned him that failure to respond might result in dismissal of the case or entry of judgment for Berkley. November 21, 2019 Order, Dkt. 24. To date, Clarke has not responded. On June 11, 2020, the Court also ordered the Estate to respond. Minute Order (June 11, 2020). On June 25, 2019, the Estate filed an opposition contesting Berkley's motion for summary judgment. Third-Party Def.'s Opp'n, Dkt. 25.


A. Summary Judgment

Rule 56 of the Federal Rules of Civil Procedure mandates that "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact

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and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A fact is "material" if it "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Holcomb v. Powell, 433 F.3d 889, 895 (D.C. Cir. 2006). And a dispute is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248; Holcomb, 433 F.3d at 895. "If there are no genuine issues of material fact, the moving party is entitled to judgment as a matter of law if the nonmoving party fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Holcomb, 433 F.3d at 895 (internal quotation marks omitted).

B. Sanctions

Under Rule 37(d), the Court "may, on motion, order sanctions if a party or a party's officer, director, or managing agent . . . fails, after being served with proper notice, to appear for that person's deposition." Fed. R. Civ. P. 37(d)(1)(A). The rule contains a non-exhaustive list of potential sanctions, which includes striking pleadings and treating certain matters as conceded, and further provides that "[i]nstead of or in addition to these sanctions, the court must require the party failing to act . . . to pay the reasonable expenses, including...

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